Skolkovo initiative could give new boost to Russian startups

On June 2-3, 2015 a major event was held at the Startup Village at Skolkovo Innovation Center in Moscow. The initiative has the potential to stimulate the development of Russia's startup environment.

Russia’s startup entrepreneurs look set to benefit
from the backing of Moscow’s Skolkovo Innovation Center, following a large-scale
event recently held by the organization at its Startup Village.

Over the course of two days the Startup Village greeted
more than 10,000 participants: Russian and foreign entrepreneurs, investors,
venture fund representatives and government officials. The event was an
unprecedented one in Russia, where the innovation ecosystem began developing
only a few years ago. The Startup Village was the grand finale of a road show
of Russian development institutions. Throughout the year, as part of the
Startup Tour, they have been looking for the best innovation ideas in 12
Russian cities.

"The startup environment has just begun in Russia
- we are witnessing its birth," says Alexei Sitnikov, vice president of
the Skolkovo Institute of Science and Technology (Skoltech), a joint project
between the Skolkovo Foundation and MIT. In 2015, during the course of the Startup
Village event, Skoltech held its first graduation. More than 70 percent of its
students established their own companies during their period of studies.

"Just a few years ago Russia did not have a
startup environment or infrastructure for their development," claimed
Sitnikov. "Often the technologies that Russian companies offer are the
best of their kind. The only question is whether or not they can be
commercialized abroad."

Today Russian startup companies have an enormous
selection of platforms for their development. At the Startup Village techno
park representatives from Spain, Turkey, Singapore, Japan, the U.S. and many
other countries spoke about their opportunities. Before entering foreign
markets "it is important to get a strong foundation in your own
country," said Susanne Burkeholder, director of the Huston Technology
Center, one of Skolkovo's partners.

"What makes a startup land in Russia?"
Burkeholder remarks. "It is the support system, which Skolkovo definitely
has. The innovation center's collaborators have a very high level of
competency. Something unique is developing here. Therefore Russia is an
excellent place to establish a company."

In search of investors and partners

Over 1,000 investors from all over the world
registered at the Startup Village conference. On the first day alone 14
agreements were signed with a total value of 13 billion rubles. This amount tallies
only the largest agreements, including those with giants such as Alibaba
Express and Panasonic. Smaller deals took place on the sidelines, sometimes
even during the startups' pitch sessions.

"Do you understand that to test your antitumor
apparatus and then try to enter a market, you will need to invest much, much
more?" a jury member asked a representative of a regional startup that presented
their idea at the Biomed competition. There were some questions from the
audience. Then an intellectual property consultant from a large Korean company
stood up and asked: "How much do you need for your development?" The
representative said $10,000. It was in such an informal atmosphere that
potential deals were hashed out.

Approximately 350 teams participated in a competition
to attract investments for their projects. A total of 26 startups made it to
the final round and there were three winners. The Graviton project won first
place, which offers sensors for security systems. The Tektum project came in
second place, a product offering a hemostatic device. The bronze medal was
given to RealTarget, a new immunotherapy method for treating oncological disease.

Is technology outside the realm of politics?

The main obstacle for Russian startups today is the
economic sanctions and the political environment. According to a Finnish
participant, many Finnish companies that were interested in Russian startups
and wanted to enter the Russian market had to postpone their expansion. The 40
foreign diplomats visiting Startup Village all seemed to agree that, technology
should stay “outside of politics."

American Ambassador John Tefft reminded everyone that
half a dozen of large American companies, including Microsoft, IBM and Boeing,
are among the innovation center's partners. French Ambassador to Russia
Jean-Maurice Ripert, who was clearly disappointed by the absence of French
cheese at the food court, talked about the participation of French architects
in the creation of Skolkovo's architectural image.

"We like to do business with people here,"
said Burkeholder. "I think that bilateral relations are happening
here. They happen between companies, they happen between people. There are some
things to overcome, but I think we’ll just keep moving forward."